Welcome to Beijing-on-Thames — China’s super-rich buy up prime London

Welcome to Beijing-on-Thames — China’s super-rich buy up prime London

By Carol Lewis

The capital is now the world’s most popular investment destination for the Chinese

The Bryanston, overlooking Hyde Park, is a popular development with Chinese investors.

 

“We used to call London Moscow-on-Thames because of all the wealthy Russian buyers, but now agents are calling it Beijing-on-Thames,” says Jeremy Gee, a London estate agent.

“We are all looking at employing more staff who speak Mandarin and Cantonese, and since the lockdown ended, flights to and from China have risen dramatically. Over the last few weeks we have had a dozen deals in the pipeline from buyers from both mainland China and Hong Kong,” adds Gee, who is the managing director of Beauchamp Estates.

Last week Gee sold a £2 million two-bedroom pied-à-terre at 22 Buckingham Gate to a young Chinese businesswoman from Guangzhou and helped a wealthy financier from Shanghai with a budget of £25 million to look for a London base.

A two-bedroom apartment at 22 Buckingham Gate was sold to a Chinese businesswoman for £2 million by Beauchamp Estates in June.

 

“What’s interesting for us is that he’s shrewd. He’s not just looking at the usual locations, such as Knightsbridge and Belgravia, but he’s been far more interested in looking around at locations such as Covent Garden, Whitehall, Midtown and Fitzrovia, and St John’s Wood,” Gee says.

“When the Russians used to come in looking for trophy properties they were really only interested in Knightsbridge, Mayfair and Belgravia. The mainland Chinese and Hong Kong buyers tend to be far less postcode snobs. Yes they want something good, but they also want bang for their bucks and to max their investment.”

Last year 49 per cent of sales in prime central London areas such as Mayfair, Belgravia and Knightsbridge were to international buyers. Mainland Chinese buyers made up 7 per cent of these and Hong Kong Chinese 6 per cent. This compares with 36 per cent from Europe, 23 per cent from the Middle East and only 2 per cent from Russia — down from 12 per cent in 2011, according to research by Hamptons International.

Office for National Statistics (ONS) data shows that Hong Kong and mainland Chinese buyers invested £7.69 billion in London property, including more than £750 million in residential property in the central neighbourhoods of Westminster and Kensington & Chelsea last year.

About 98,725 London properties are believed to be owned by Hong Kongers and 120,250 by mainland Chinese, making London property the most popular investment destination for Chinese capital in the world, according to Beauchamp Estates.

A six-bedroom penthouse in Belgravia Gate was the biggest sale of 2019 when a young millionaire from Hong Kong bought it for £65 million (Beauchamp Estates).

 

This year there has been a surge of interest from mainland Chinese and Hong Kong buyers off the back of the political situation in Hong Kong and the visa offer from Britain. Often, though, the distinction between the two groups is opaque, with many wealthy Chinese bringing their money out through Hong Kong.

Many high-end estate agents have employed Cantonese and Mandarin speakers to help with the influx of buyers, with many of the Chinese inquiries — and sometimes deals — conducted via Wechat, the Asian equivalent of Whatsapp.

Several high-profile sales are believed to have been to Chinese or Hong Kong buyers in recent months, including the sale of a townhouse on Cambridge Terrace near Regent’s Park for £104 million by the property developer Christian Candy to a Chinese buyer last month and the sale of 2-8a Rutland Gate, overlooking Hyde Park, in January for £210 million to Cheung Chung-Kiu a Hong Kong-based Chinese billionaire — the biggest property sale of the year so far.

Mark Pollock, the director of Aston Chase estate agency, says: “Mainland Chinese buyers have been a significant presence since the Russians stepped back, and they haven’t gone away despite the cold water between our two governments. They tend to be looking for investment properties and second homes — very substantial second homes. They also tend to be very reserved and often come with a property finder in tow.”

Camilla Dell, the managing director of Black Brick, a buying agency, says that she has been approached by a “fixer in Dubai who was looking for property for a Chinese buyer in Hong Kong”. Restrictions on currency exchange mean that many wealthy Chinese have become adept at moving money around and often have global connections.

Guy Bradshaw, the director of UK Sotheby’s International Realty, is on the verge of doing a £9 million deal with a client “who is a Chinese buyer whose money is coming through Hong Kong. A lot of wealthy Chinese had business interests in Hong Kong and they are now re-evaluating their position.”

The majority of Bradshaw’s deals with Chinese buyers are done via Wechat, including one for a £600,000 new-build apartment last week for a businessman who is relocating from China to London for work.

“Traditionally they looked for very modern apartments, and often still do, but one I sold recently was a very traditional Victorian house. It was in immaculate condition. The Chinese love our history. Anything near Buckingham Palace or owned by the big estates, like Grosvenor, is popular. But they will travel — Oxshott in Surrey is also popular — and farther afield,” Bradshaw says.

Chinese property billionaire Cheung Chung-Kiu, who owns Hong-Kong listed CC Land, paid £210 million for the palatial 45-bedroom 2-8a Rutland Gate, Knightsbridge, in January. It is the biggest deal of 2020, so far (Beauchamp Estates).

 

Popular locations for homes in London include the northwest suburbs of Hampstead and St John’s Wood, including Avenue Road, where Sotheby’s International Realty has a mansion for sale for £75 million and where at least four homes are believed to be owned by wealthy mainland Chinese, and nearby Elsworthy Road.

New developments attracting Chinese buyers include the Bryanston overlooking Hyde Park near Oxford Street, One Grosvenor Square (where a Chinese businessman is understood to have paid £110 million for the penthouse in 2018), Clarges near Hyde Park, and Hanover Bond in Mayfair, which has branded residences by the Mandarin Oriental.

Peter Wetherell, the chief executive of Wetherell, a Mayfair estate agency, says: “It tends to be Chinese people who have got their money in the international system, which makes it a bit tricky sometimes to separate Chinese and Hong Kong buyers. The change is that they are not just buying for investment any more. Chinese and Hong Kong buyers are looking for trophy homes, and the visa offer and stamp duty change has helped create momentum.”

The chancellor has raised the threshold for stamp duty from £125,000 to £500,000 until March 31 next year. The government has also said that it plans to introduce a 2 per cent levy for non-British buyers, in addition to the existing 3 per cent second-home charge.

Traditionally Hong Kong buyers have been associated with new-build investment properties in locations such as Kings Cross in north London, Nine Elms in south London and Canary Wharf in east London, as well as university towns such as Manchester, Birmingham, Leeds and Liverpool. Now it is not just the wealthy, but a wider range of buyers looking for homes they can move to, should they need to leave Hong Kong.

When Middle Eastern and Russian buyers first arrived in London in the early Noughties they were often derided for their love of gold taps and backlit onyx. Today there is a more generic international palette, although some describe the new wave of Chinese buyers derisively as “opulent” and “new-money”.

The influx of Chinese and Hong Kong buyers could mean a greater emphasis on feng shui — the practice of designing to miximise the flow of energy through a property — in British developments.

Dara Huang, the founder of Design Haus Liberty, a design and architecture firm says: “Chinese buyers hold on to the principles of feng shui, so homes with square or rectangular floor plans are a must, to bring balance and harmony for the whole family. It is important for good energy to be able to flow throughout the home.

“Our team from Hong Kong get specialist training in feng shui to service our clients better, which is probably an afterthought for other companies. When we are designing we have a master of feng shui assisting. Proximity to water is still super-important to Chinese buyers too. Water is said to hold on to chi in feng shui, so overlooking a river, lake or even having a pool is very desirable.”

Although she adds: “Things to avoid include the number four as it is considered unlucky. So the fourth floor, door No 4 are usually a no-go.”

 

 

 

The areas set to step into the spotlight

View the article online here

Homes the super rich are buying now

By Carol Lewis

The wealthy are splashing out on penthouses. We look at the reasons behind this buying spree

The five-bedroom penthouse in Cheval Place, Knightsbridge, central London, is on sale for £24.5 million through joint agencies H Barnes & Co and Knight Frank.

Reports of the death of the super-prime property market have been greatly exaggerated, as Mark Twain might have said had he worked for an estate agency in London. Hundreds of millions of pounds of property transactions have been completed in the past six months, with buyers — particularly those with US dollars to spend — aiming high and paying top prices for penthouses.

Among these is the penthouse at the Peninsula London hotel, overlooking Hyde Park in central London, which is believed to have been bought for £100 million by Ken Griffin, an American investor, as part of a wider portfolio, which includes a mansion on Carlton Gardens, St James’s, for £95 million.

Caspar Harvard-Walls, a partner at Black Brick, a buying agency, says: “It is the classic thing of people trying to call the bottom of the market. For those with American dollars there’s been an extra incentive. The weak pound means that buyers now receive the equivalent of a 40 per cent discount on prices, compared to the first quarter of 2015. “There is a feeling that there might have been an overcorrection in the market and maybe it has gone too far in favour of the buyer. There is also the reasoning that if people like Ken Griffin are investing, maybe they ought to, too.”

Griffin’s acquisition is not the priciest of its kind in this period, though, having been pipped by the sale of the 8,100 sq ft penthouse — with a 5,000 sq ft roof terrace — at Lodha’s No 1 Grosvenor Square development to an unnamed Chinese buyer for a reported £105 million. These prices beat the previous year’s £90 million sale of the penthouse at The Knightsbridge to the British media entrepreneur Ashley Tabor.

Buyers at this price point are fussy. James Hyman, the head of residential at Cluttons, an estate agency, says: “These are not just top-floor flats, they have to be the whole top floor, have unrestricted 360-degree views, double-height ceilings, a hotel-style concierge and total ‘wow’ factor.”

The penthouse that has fetched the highest price this year is thought to be that at Clarges Mayfair, just off Piccadilly and overlooking Green Park, in central London, which sold for £55 million (after a £60 million deal for the same property fell through), with a smaller penthouse in the same development selling for £38 million.

There has recently been a cluster of other deals between the £15 million and £20 million mark, including the penthouse at the Nova development, near Victoria, for just under £17 million.

This spurt of activity can partly be attributed to several new-build super-prime penthouses having come on to the market at the same time. There are more in the pipeline, too, with hopes of record prices at John Caudwell’s Audley Square development in Mayfair, where the eight-bedroom penthouses are said to have their own swimming pools and gyms.

Penny Mosgrove, the chief executive of Quintessentially Estates, the buying agent involved in the sale of the Clarges Mayfair penthouse, says: “Here is a purchase that represents confidence in the prime central London market and assurance in the UK’s economy, despite Brexit and other global pressures.”

While the lower end of the London market remains cautious over Brexit concerns and increased stamp-duty rates, buyers at the upper end are jumping at the opportunity to invest.

Ed Lewis, the head of residential sales at Savills, says: “There is confidence in the London story and, if we have an orderly Brexit, many believe there will be a surge in the market and prices will rise.”

Mosgrove says: “We have more than £200 million of property requests for prime central London.”

And Camilla Dell, a managing partner at Black Brick, says: “We had a record number of inquiries for property up to £20 million in January, more than the whole of the last quarter last year. There is a lot of pent-up demand.”

Stuart Bailey, a partner in Knight Frank’s Belgravia office, says: “There are two schools of thought: either that people want to spend on the best in class and think, ‘My equity is safe here’, it is a real flight to quality, or people are looking for a second-hand property that they can get at trade prices. There is a belief that best-in-class penthouses will hold their value because there is a finite supply, and with predictions that the market will rise by 12 to 13 per cent over the next five years I expect buyers will hold for the medium term.”

David Lee, the head of sales at Pastor Real Estate, has also had an increase in buyers looking for properties between £10 million and £20 million.

“There is a real inflection point in calling the bottom of the market in terms of the dollar-sterling currency,” he says. “Brexit is not important for many at this level. They have cash and still feel that central London is a good place to have it.”

Hyman, who recently sold the freehold of the Bankside Collection, a 16-storey development that includes a triplex penthouse, for more than £19 million, says: “The international market hasn’t fallen out of love with London. It has very much been sitting on the fence and waiting for the market to bottom out, waiting for the London property market to stabilise, but more importantly the currency play.”

For many of the buyers and sellers of these super-prime properties, discretion is paramount, with penthouses such as the one at No 1 Grosvenor Square neither advertised nor marketed. Wealthy buyers such as Griffin send agents to scout out suitable properties, with offers made through brokers.

Mark Parkinson, a founding partner of the buying agent Middleton Advisors, says: “A lot of the buyers at this end of the market have US dollars to spend, and to a lesser extent euros. For some it is about currency, for some Americans there is the prospect of [President] Trump gaining a second term too.

“For others it is political instability at home. They are not too worried by Brexit. For many at this level it is not going to be their main home; domestic politics isn’t seen as too much of a worry. Taxation might be more of a worry, with the prospect of a Corbyn/McDonnell government, but many think that would be short-lived.”

The market is in a twilight zone

By Anne Ashworth

People without the taste for political intrigue may have had enough of conversations about Brexit, but there is an appetite for news about its impact on the housing market, especially for tales of mansions struck by Brexit blight.

A former pub in Mayfair (converted into a residence with a gym and pool) recently fetched £15 million. It had been marketed for £25 million before it was repossessed. Camilla Dell of Black Brick, a buying agency, acquired the house on behalf of clients. Many of the wealthy like to subcontract house-hunting to this species of personal shopper, which may be why they secure advantageous deals.

You should be able to obtain a discount on a new-build property if you target certain developers in the right way. Smaller companies may be more under pressure from their banks.

Outside London and the southeast, requests for price cuts may be less likely to succeed because Brexit has done less harm. Since the referendum in 2016, prices in ten cities in the Midlands, the north, Wales and Scotland, including Edinburgh and Manchester, have appreciated by as much as 16 per cent, according to Zoopla, a property portal.

In this new north-south divide there is one uniting factor. In every area, homes are selling more quickly if the online pictures feature a shot taken at dusk, with welcoming light shining from every window. This response to comforting images, combined with the downbeat tone of Nationwide’s latest survey, suggests that uncertainty may be spreading beyond London and the south. There are buyers around, but they want the reassurance that a home will be a haven in every sense of the word.

Yes, you can buy near a top school

One result of the property slowdown is lower prices close to good primaries

By Jessie Hewitson

This three-bedroom house in Kensington, west London, is on sale for £2.75 million through Lurot Brand. It is close to Fox Primary School, which is ranked ninth in the country by The Sunday Times Parent Power guide.

Securing a place at some of the country’s top schools may now be easier than you think. Fewer property sales in the catchment areas of some of the best state schools is creating opportunities in these locations for savvy buyers.

Knight Frank analysed the local property markets of top schools as ranked in Parent Power, a schools guide published by The Sunday Times, and found that sales within one and a half miles of the top ten state schools dropped 18 per cent in four years, from 15,656 in 2013 to 12,822 in 2017. This is at odds with the average 15 per cent growth in property sales UK-wide in the same period.

These findings indicate that schools aren’t receiving the usual number of applications for Reception places (a child’s first year of primary school), which had to be lodged by Tuesday for the start of the school year in September.

This four-bedroom house in Great Bonas, Shropshire, is on sale for £925,000. The nearby primary school at Tipperton is ranked as outstanding by Ofsted.

Estate agents report that catchment areas are widening as a result, and one desirable school in north London, rated outstanding by Ofsted, is for the first time having to market itself to parents. The school blames its dwindling applications on the local property market: there are no new families moving to the area.

“The slowing property market will mean that people who want to sell a property within a traditional catchment area may struggle, so the catchment area may grow to take in streets that historically would never have had the chance of getting a place at the school,” says Caspar Harvard-Walls, a partner at Black Brick, a buying agency. “This is good news for those parents and buyers, especially because properties outside the traditional catchment area are usually cheaper than those inside.”

The lull in sales close to good schools has been compounded by a general drop in property transactions since 2017 and property unaffordability after years of strong price growth.

According to Patrick Gower, an associate in the research department at Knight Frank, the drop in sales is related to the drop in house price growth, tighter mortgage regulations and potential sellers not building up enough equity to move up the ladder. Brexit uncertainty is also causing vendors to wait and see before moving, with this week’s vote doing little to change this.

“This poses problems for schools with tight catchment areas, and some will need to look farther afield for their intake,” Gower says. “The issue is likely to be compounded for primary schools with an outstanding secondary school near by, [because] it effectively reduces the need to move.”

A four-bedroom apartment in Earls Court, west London, is on sale for £1.75 million through Tedworth Property.

Marc Schneiderman, the director of Arlington Residential, an estate agency in northwest London, says that the volume of sales in St John’s Wood and Hampstead, where there are many outstanding private and state schools, has gone down by about a third compared with two years ago. “With fewer families moving into these areas, the number of new pupils at local schools has been reduced,” he says. The homes within close walking distance of well-regarded schools that have historically sold quickly are also taking “some time” to sell.

James Hyman, the head of residential at Cluttons estate agency, says that, while property prices in good catchment areas of central London have not dropped by as much as the 15 per cent national average over the past three years, they have gone down
(5 per cent). However, research by Knight Frank shows that homes near the best schools command, on average, an 11 per cent premium compared with ones at the bottom of the league tables.

The stagnation in people buying and selling means that local authorities are having to flex the rules on owning a home and renting in the same borough. One parent, who is renting a home close to a desirable secondary school in Haringey, north London, but also owns a home outside the catchment area, was recently inspected by Haringey council. When asked why she was renting while also owning a home, she said that she couldn’t sell her main residence in the present market. The local authority accepted her explanation. It is likely this reason will increasingly be given to councils as parents give up on moving closer to schools and choose to rent instead.

Jemma Scott, a partner at the Buying Solution, a property agency, says she has seen a “marked reduction in the availability of prime rental family houses in the home counties. She says in Ascot and Sunningdale in Berkshire and Virginia Water in Surrey some families are opting to rent during Brexit negotiations and have given up trying to move close to a new school.

The foodie revolution continues in London

The foodie revolution continues in London

In the second of a two part series we look at neighbourhoods where growth is being driven by great food.

By Jayne Dowle

The Mansion development by Clivedale is just to the north of Oxford Street, close to Marylebone, in central London. Apartment prices start at £4.95 million.

Last week we brought you the regional locations where the food revolution is fuelling buyers’ appetites. In the country, nothing adds value to a property like an award-winning village pub or a bustling farmers’ market within walking distance. This week we focus our attention on London.

Part of the old BHS on Oxford Street will reopen in the summer, not as a department store, or a cheap sportswear outlet, but as an indoor market, brimming with producers, retailers, restaurants, street-food vendors, four bars, event spaces and a demo kitchen. It belongs to the chain Market Halls, which is opening branches across the capital and regionally, including one in York in late spring.

Its expansion underlines the growing relationship between decent food outlets and a postcode’s popularity. Take, for example, Borough Market in southeast London. Southwark has grown dramatically in popularity since this foodie paradise appeared 15 years ago.

Soho and Marylebone, prime locations within walking distance of Oxford Street, enjoy a fine reputation for neighbourhood markets, delis, restaurants and cafés.

However, is it the eateries that attract the residents, or vice versa? It’s a debate that the residents of Islington have been chewing over for decades, with the restaurants of Upper Street contributing to a Georgian terraced house in NW1 being able to command an average of £1.38 million.

Whatever the answer, it’s a trend that other areas of London are rapidly emulating. “An army marches on its stomach and the march of some of London’s coolest neighbourhoods is being driven by great food,” says Nick Dawson, an associate at Garrington property finders. “Shoreditch in east London is a shining example. The formerly down-at-heel neighbourhood is a hotbed of tech start-ups, with a bohemian vibe and new restaurants and bars opening. For a three-bedroom property in Shoreditch you can expect to pay £1 million on average, but this is still nearly a third cheaper than the likes of Soho and Covent Garden.” Speaking of value for money, Bethnal Green (where the average price of a flat is £512,102) and Hackney Wick (£522,298) are good examples of areas getting an upgrade to their traditional offering of greasy spoons as buyers move eastwards in search of affordability. “These may offer a slightly more eclectic feel, but they do have an abundance of artisan breweries and cheesemakers,” Dawson says.

Northfield Butchery in Borough Market in Southwark, southeast London.

Tom Kain, a buying consultant for Black Brick, a property agency, adds Brixton and Bermondsey to the list. “These are good examples of areas that have rapidly become more gentrified,” he says. “And a large part of the gentrification is fuelled by the food markets. Many young professionals and families relish the pop-up foodie outlets found in Brixton Village and Maltby Street Market in Bermondsey. It certainly is a draw card.”

A main factor is the surge in healthy and organic eating. Katy Brookes, a sales manager at Foxtons in Muswell Hill, says that a popular spot for north London’s health-conscious is Planet Organic, open until 9.30pm to welcome weary commuters desperate for a Fatigue Fighter (apple, beetroot, orange, celery and ginger) fix.

Her colleague, David Busson, says that the farmers’ market in nearby Stoke Newington helps to create a sense of community and marks the area out from its neighbours. Stoke Newington, with an average price of £653,804, is more expensive than Stamford Hill (£570,416), Upper Clapton (£506,292) and Clapton Common (£510,760). “All the produce comes from within 100 miles of Hackney,” Busson says.

And if you’re wondering where the next hot meal might be coming from, Dawson advises looking northwest. “Queen’s Park is one to watch, with gentrification spreading into the less-affluent areas of Kilburn and Willesden and creating strong demand for fine dining,” he says. “With investment in Queen’s Park on the rise — and family upsizers continuing to move in from Notting Hill and St John’s Wood — this is a foodie haven that might be worth getting in on now.”

Not all schemes are created equal

There are bargains in the prime market, but choose carefully for a sound investment.

By Carol Lewis

Buyer beware: there is a glut of luxury flats coming on to the market, so you will need to be discerning.

Jonathan Mount, a director of Sterling Private Office, a property advisory company, says: “With construction of prime new-builds outstripping demand by two to one, concerns of oversupply in London’s prime market are justified. However, while we advise our clients to tread carefully, there are savvy investment opportunities in this market if investors exercise good judgment. The key is to find something unique, that won’t become part of a homogenous mass.”

The luxury new-build market is floundering amid Brexit uncertainty and developers are feeling the pinch. Capital & Counties (Capco) wants to sell its site in Earls Court, west London, while Barrett London says it isn’t going to build anything in the transport zones 1-3 for the next two years. Almacantar, the developer that owns Centre Point in central London, has said it will stop selling rather than cut prices.

“There’s no point buying a property simply because it’s cheap if it’s still going to be cheap in five or ten years,” says Caspar Harvard-Walls, a partner at Black Brick, a property buying agency. “The challenge is finding properties that are competitively priced and really good quality.”

Harvard-Walls says that repossessions are starting to come on to the market in locations such as Nine Elms, south London. “We are seeing more repossessions across the board, but particularly at the higher end. People who bought off-plan in 2014-15 in a project, with a three-year build time, and put down a 20 per cent deposit on a £1 million property, are finding that the bank is revaluing the finished property at £850,000. With banks lending less, the buyer has to stump up the difference.

“You shouldn’t be tempted by the cheaper price. If they were originally being sold at an over-inflated price, it doesn’t make them good value now. Buyers need to think about whether the property will still be of interest to buyers in the long term.”

Charlie Ellingworth, a director at Property Vision, a buying agency, says: “There is a load of stuff being thrown up and buyers need to tease out the decent places, look for quality and place-making. Find a good development where the pricing is right. If flats in the mansion block next door are selling for £900 a square foot, then £1,300 a square foot for the shiny new tower block isn’t great value.”

Rachel Thompson of Sterling Private Office recommends looking for something that will hold its value, either because it is within a special building, such as the 253 apartments in the grade II turbine hall at Battersea Power Station, or the apartments in the renovated grade I listed Regent’s Crescent, or the location is special, such as Lodha’s Lincoln Square development near the London School of Economics in central London, or Chiltern Place, one of the few high-rise blocks in Marylebone in London’s West End.

What to look for

● Walk the area Lots of places are marketed as “just two to three miles from Harrods”, or in “central London”. Make sure you really know where you are buying.

● Research future plans Find out what is proposed for the area. You don’t want your view obscured by a tower block in a year’s time.

● Look into the developer Buy from a reputable company. Go and see what else it has built. Be wary of those offering incentives, such as free cars or luxury gifts; there’s probably a reason.

● Check the scheme details Buy from schemes where the contract to buy can’t be reassigned several times before completion. If contracts can be reassigned, it leads to oversupply and threatens the value of your property.

● Insist on quality Look for classic contemporary finishes that won’t date.
Inspect the building materials used. A nice worktop is no substitute for poor-quality units.

● Negotiate It is possible to save as much as 30 per cent on the price in some schemes.

 

How to stay friends with an estate agent

If you’re selling or buying a home it’s difficult to avoid dealing with one. Here’s what to watch out for

We trust bankers, weather forecasters and television newsreaders more than estate agents, according to the latest Ipsos Mori Veracity Index, but if you’re selling or buying a home it’s difficult to avoid dealing with one.

While there are trustworthy agents, a dastardly few spoil it for the others. This is despite a raft of measures, announced by the government in April, aimed at cracking down on rogue agents by making qualifications mandatory and promoting professional standards.

There is no overall governing body for estate agents. Instead, there is a hierarchy of legislation, mandatory redress schemes and professional trade bodies, including the National Association of Estate Agents (NAEA) and the surveyors’ organisation RICS.

Paula Higgins, the chief executive of the HomeOwners Alliance, an advice and campaign group, says all estate agents need to be a member of a consumer redress scheme. However, one of the schemes, the Ombudsman Services: Property, no longer works in the property sector, so any agency still registered with the scheme may be trading illegally. Make sure your agent is a member of the Property Ombudsman or Property Redress scheme.

Here’s what else sellers and buyers should watch out for:

Over-valuing
It’s reported that 86 per cent of properties are selling for less than their asking price, so a realistic valuation is critical. “Estate agents want your business and can sometimes give overly generous valuations so you pick them,” Higgins says. “Once you’re on the market at an inflated price the only option after a lack of interest from buyers is to suggest you lower it.”

There can be an element of vendor vanity in this too. However, a good agent will offer brutal guidance, and a good seller will get at least three valuations from different agents.

Down-valuing
When you do manage to find a committed buyer, along comes a valuer for the buyer’s mortgage company to say that your beloved home is worth less. While lender nervousness can be a factor in this, agents inflating prices don’t help. However, Higgins says: “If you genuinely believe a valuation is incorrect, don’t be afraid to challenge it. If you think the figure is wrong or have evidence of local sale prices to the contrary, question it.”

Claiming to have buyers waiting
Few agents have legions of ready-made buyers clamouring to view your home, whatever they may claim. If you are buying, do your due diligence. It has been known that those who register with certain agents and sign up to their mortgage and conveyancing services receive preferential treatment. If you suspect it’s happening, contact the relevant ombudsman.

Keeping it in-house
Camilla Dell of Black Brick, a property consultant, says there is nothing wrong with agents earning referral fees for persuading you to sign up with their recommended conveyancer, mortgage provider, energy performance assessor or plumber, but they must be clear about this in writing. However, she does advise against it. “Always use an independent lawyer and surveyor. While all parties should be neutral and act professionally, this isn’t always the case. There is a risk they may not be forthright if there is a legal or structural issue.”

Portal juggling
This is a murky area where buyers, sellers and reputable estate agents unite. It has been known that properties taking a long time to sell will be removed from portals such as Rightmove or Zoopla by a duplicitous agent. They relist it shortly afterwards, which reduces the portals’ “how long on the market” statistic, making the agent and house look better. It’s an offence under the Consumer Protection from Unfair Trading Regulations Act and industry codes of conduct, but that doesn’t stop it happening.

Hidden fees
The average high-street estate agency fee is about 1.42 per cent, including VAT, of the sold price of a property, says Gavin Brazg of the The Advisory, an online property advice service. “It is worth being very clear with agents about what you are paying for, especially any add-ons,” says Kate Faulkner, a property expert. As a rule, most marketing expenses should be included in the commission fee and not billed as extra costs. And check that you are not liable for any payments if you withdraw from the contract.

Failing to pass on offers
Sellers, after you’ve accepted an offer and up to the point of exchanging contracts, your agent is obliged to pass on any other offers, including higher ones. However, your agent may elect not to because they have the first buyer “verified” in-house, or they simply want to shift your property off their books without distractions. If you find out this has happened, raise it with the agent, and seek redress. It is also said that some agents pressure dithering buyers into making an offer by inventing phantom bids.

If you suspect a false bid, ask to see written proof that the third party exists and their offer status.

Double commission
This is when a seller sacks one estate agency, working on a commission basis, and puts their house on sale with another, but the original agent claims they “introduced” a buyer and attempts to claim commission on the sale. The hapless homeowner can be faced with requests for double commission.

The problem lies in confusion over what constitutes an introduction. Look up the 2008 case of Foxtons v Bicknell & Anr in which the Court of Appeal ruled that to claim a commission the estate agency had to do more than introduce the buyer to the property; they must be directly involved in the selling of the house. Avoid any agent who attempts to persuade you to sign up for “sole selling rights”, which allows them free rein on any sale. They could claim their commission even if your cousin from Australia turns up on your doorstep and buys your home for cash.

Over-long contracts
Lots of estate agencies include a tie-in period in their contracts, meaning you may struggle to escape if you’re not happy with the service you’re receiving. “Make sure your contract gives you the flexibility to terminate and go elsewhere, without incurring a penalty,” Higgins says. “You should never tie in for more than 12 weeks and be careful of long notice periods too.”

Overstating potential
A desperate estate agent may go to any lengths to convince a doubting buyer. This includes telling them a spine wall can be easily removed to create a lovely open-plan kitchen and that air conditioning might be popped into place in a leasehold flat as easily as changing a lightbulb. “Never take an estate agent’s estimate on any cost as written,” Dell says. “Always seek a second opinion and independent advice on any additional costs you may have to incur post-sale.”

The fixed-upper is fashionable again

By Jane Dowle

The windows need replacing and there’s a big crack in the drawing room ceiling, but this won’t deter the growing number of buyers seeking distinguished but dilapidated properties to make their own.

In central London and other popular spots, where a buyer’s search radius can be as specific as one or two streets, distressed homes are extremely sought-after, says Noel De Keyzer, the head of Savills in Knightsbridge. “In particular favour are those which require full refurbishment because they allow super-prime buyers to tailor it to their own design and taste,” he adds.

These faded glories are an ideal opportunity for buyers to make money. “We recently sourced a property in Marylebone [northwest London] for a client that was for sale at £1,200 a square foot,” says Camilla Dell, the managing partner at Black Brick, a buying agency. “The buyer needed to spend £300 a square foot renovating it. However, when complete it will be worth upwards of £1,800 a square foot, making it a great deal.”

Camilla says that as sellers seek to release capital, there is an increase in suitable properties coming on to the market. “Many of these properties are in need of renovation,” she says. “They are often family properties owned for several generations and have gone up in value considerably since they were originally bought. Therefore, sellers are willing to take a deal.”

Outside of the capital, Marcus Gondolo-Gordon, a search expert at Incognito Property, a property consultancy, says that an increasing number of people are selling in London and looking for large properties to renovate, rather than build from scratch. “Adding their own design to a place comes without the pain of seeking planning and finding a suitable plot, plus the stress of bringing in services and drainage to a site,” he says. “Crucially, finding a well-priced ‘doer-upper’ has the additional benefit of saving a large sum on stamp duty land tax. Buyers can add value by renovating, extending, modernising and improving, using the funds they have saved by not paying as much in purchase tax.”

What can home improvers on more modest budgets learn from these grand renovators?

Get on the radar
The most promising renovation properties are snapped up immediately. Many don’t even make it to the open market, so are not advertised. “Make sure that you are front of the queue,” says Gondolo-Gordon. “Strike up a good relationship with agents and keep in touch to make sure that you are top of their list when new and interesting options come up.” You should ideally be pre-qualified, with your finances in place, so you’re ready to swoop. Cash buyers in rented or “under offer” situations are seen as “hot” and are more likely to get first refusal.

Establish priorities 
“Picking a property, with ‘good bones’ and lots of daylight is far more important than looking for specific features,” says Charles Bettes, the managing director of Gpad London, an architecture and interior design company. “A well-proportioned space can be made to feel homely and is enjoyable to spend time in, but an odd-shaped room with low ceilings can be hard to make beautiful. Somewhere without enough daylight will never be comfortable.” Before you make an offer, visit at different times of the day to see how the light falls.

Financial facts
Don’t let your imagination run away with your budget, warns Harry Gladwin, a partner at the Buying Solution, a buying agency. “When you’re preparing to make an offer, you need a full picture of faults and challenges. Key areas of focus will be the ecology of the property, such as whether bats inhabit the main house or outbuildings, and the use of hazardous materials such as asbestos; we were recently able to negotiate £150,000 off a £7 million country manor house because of asbestos.”

Planning permission 
Beware of restrictive covenants, ancient light, access or easements rights, and listing and conservation area restrictions, any of which may scupper or escalate the costs of an ambitious renovation plan, according to the London-based architect Neil Tomlinson, who specialises in high-end refurbishments. “With any older building, you should also check at the outset for any structural defects, often betrayed by settlement cracks,” he says. “A slow descent down a dilapidated mineshaft might mean the best bits of the property have to be demolished.”

Let it breathe
The smell of fresh paint in a renovation sale puts David Shaw, an architecture specialist at Savills, on high alert. “It’s worth checking further for signs of damp and water ingress that have been hastily covered up,” he warns. “The mechanics, electricals and ventilation are key aspects in any renovation and one of the most expensive to rectify. Inspect the boiler room and electricity circuitry and make sure all are compliant. And if you suspect the garden has been back-filled over the years, check that no air vents have been blocked — this is a main cause of damp.”

Now it begins
You’ve completed the sale and the project is yours. But where to start? Rather than running amok with the sledgehammer smashing down walls, plan your restoration in elements. “Mentally break the house down into manageable sections that will not overwhelm you,” says James Nason, who recently renovated his home, the 16th-century, 60-room Pitchford Hall near Shrewsbury in Shropshire, turning the west wing into holiday lets (cottages.com). “Invariably, there will be problems, but taking it room by room reduces stress and eases cash flow.”

Make an entrance
If you still don’t know where to start, focus on the front door, says Caroline Takla, the director of One Point Six, a London developer. “Sweeping drives, historic entrance gateways and lovely heavy front doors, with vintage door-knockers, give the feeling of grandeur,” she says. “Borrow this by paying close attention to the entrance hallway and space around the landings. These are the areas that ultimately give an air of space and elegance. Wide staircases in particular can add instant splendour.”

Look up
If your property is across multiple levels, see if it presents an opportunity to open up floors, volumes and voids to create imposing double-height rooms and mezzanines. This approach is guaranteed to add the wow factor, says Jonathan Ashmore, the founder of Anarchitect, an architectural practice. “You can create a more open, connected series of living spaces that reflect modern living needs and allow you to retain the heritage, such as original fireplaces.”

Inside out
An ambitious but achievable trick is to bring together indoor and outdoor spaces. “You might consider an inner courtyard or light well at the centre of the property,” Ashmore says. “The beauty of this is the deep natural light penetration, but also that the space has the potential to really feel like an extension of the interior space, either as a winter garden or open to the sky in the summertime.”

Access accessories
The interior designer Karen Howes, founder of the luxury interior design company Taylor Howes, favours the “designer shoes and handbags” approach. “This is when you couple particular pieces with an M&S T-shirt, meaning that you spend your budget wisely, accessorising in the right places,” she explains. For instance, quality flooring throughout creates an impression of being seamless. A large, signature piece of art can cut back on acres of expensive wallpaper, or obviate the need for a crushingly expensive “statement” light fitting in a room.

Be bold
While state-of-the-art gyms and infinity swimming pools may remain the preserve of those with limitless budgets, be bold, Ashmore says. “Even in a more modest project, rather than adding excessive bedrooms, think about incorporating areas that you will enjoy and use, such as a yoga studio, an artist’s retreat or en suite bathrooms in the children’s bedrooms, which are incredibly practical, too.”

In central London and other popular spots, where a buyer’s search radius can be as specific as one or two streets, distressed homes are extremely sought-after, says Noel De Keyzer, the head of Savills in Knightsbridge. “In particular favour are those which require full refurbishment because they allow super-prime buyers to tailor it to their own design and taste,” he adds.

These faded glories are an ideal opportunity for buyers to make money. “We recently sourced a property in Marylebone [northwest London] for a client that was for sale at £1,200 a square foot,” says Camilla Dell, the managing partner at Black Brick, a buying agency. “The buyer needed to spend £300 a square foot renovating it. However, when complete it will be worth upwards of £1,800 a square foot, making it a great deal.”

Camilla says that as sellers seek to release capital, there is an increase in suitable properties coming on to the market. “Many of these properties are in need of renovation,” she says. “They are often family properties owned for several generations and have gone up in value considerably since they were originally bought. Therefore, sellers are willing to take a deal.”

Outside of the capital, Marcus Gondolo-Gordon, a search expert at Incognito Property, a property consultancy, says that an increasing number of people are selling in London and looking for large properties to renovate, rather than build from scratch. “Adding their own design to a place comes without the pain of seeking planning and finding a suitable plot, plus the stress of bringing in services and drainage to a site,” he says. “Crucially, finding a well-priced ‘doer-upper’ has the additional benefit of saving a large sum on stamp duty land tax. Buyers can add value by renovating, extending, modernising and improving, using the funds they have saved by not paying as much in purchase tax.”

What can home improvers on more modest budgets learn from these grand renovators?

Get on the radar
The most promising renovation properties are snapped up immediately. Many don’t even make it to the open market, so are not advertised. “Make sure that you are front of the queue,” says Gondolo-Gordon. “Strike up a good relationship with agents and keep in touch to make sure that you are top of their list when new and interesting options come up.” You should ideally be pre-qualified, with your finances in place, so you’re ready to swoop. Cash buyers in rented or “under offer” situations are seen as “hot” and are more likely to get first refusal.

Establish priorities 
“Picking a property, with ‘good bones’ and lots of daylight is far more important than looking for specific features,” says Charles Bettes, the managing director of Gpad London, an architecture and interior design company. “A well-proportioned space can be made to feel homely and is enjoyable to spend time in, but an odd-shaped room with low ceilings can be hard to make beautiful. Somewhere without enough daylight will never be comfortable.” Before you make an offer, visit at different times of the day to see how the light falls.

Financial facts
Don’t let your imagination run away with your budget, warns Harry Gladwin, a partner at the Buying Solution, a buying agency. “When you’re preparing to make an offer, you need a full picture of faults and challenges. Key areas of focus will be the ecology of the property, such as whether bats inhabit the main house or outbuildings, and the use of hazardous materials such as asbestos; we were recently able to negotiate £150,000 off a £7 million country manor house because of asbestos.”

Planning permission 
Beware of restrictive covenants, ancient light, access or easements rights, and listing and conservation area restrictions, any of which may scupper or escalate the costs of an ambitious renovation plan, according to the London-based architect Neil Tomlinson, who specialises in high-end refurbishments. “With any older building, you should also check at the outset for any structural defects, often betrayed by settlement cracks,” he says. “A slow descent down a dilapidated mineshaft might mean the best bits of the property have to be demolished.”

Let it breathe
The smell of fresh paint in a renovation sale puts David Shaw, an architecture specialist at Savills, on high alert. “It’s worth checking further for signs of damp and water ingress that have been hastily covered up,” he warns. “The mechanics, electricals and ventilation are key aspects in any renovation and one of the most expensive to rectify. Inspect the boiler room and electricity circuitry and make sure all are compliant. And if you suspect the garden has been back-filled over the years, check that no air vents have been blocked — this is a main cause of damp.”

Now it begins
You’ve completed the sale and the project is yours. But where to start? Rather than running amok with the sledgehammer smashing down walls, plan your restoration in elements. “Mentally break the house down into manageable sections that will not overwhelm you,” says James Nason, who recently renovated his home, the 16th-century, 60-room Pitchford Hall near Shrewsbury in Shropshire, turning the west wing into holiday lets (cottages.com). “Invariably, there will be problems, but taking it room by room reduces stress and eases cash flow.”

Make an entrance
If you still don’t know where to start, focus on the front door, says Caroline Takla, the director of One Point Six, a London developer. “Sweeping drives, historic entrance gateways and lovely heavy front doors, with vintage door-knockers, give the feeling of grandeur,” she says. “Borrow this by paying close attention to the entrance hallway and space around the landings. These are the areas that ultimately give an air of space and elegance. Wide staircases in particular can add instant splendour.”

Look up
If your property is across multiple levels, see if it presents an opportunity to open up floors, volumes and voids to create imposing double-height rooms and mezzanines. This approach is guaranteed to add the wow factor, says Jonathan Ashmore, the founder of Anarchitect, an architectural practice. “You can create a more open, connected series of living spaces that reflect modern living needs and allow you to retain the heritage, such as original fireplaces.”

Inside out
An ambitious but achievable trick is to bring together indoor and outdoor spaces. “You might consider an inner courtyard or light well at the centre of the property,” Ashmore says. “The beauty of this is the deep natural light penetration, but also that the space has the potential to really feel like an extension of the interior space, either as a winter garden or open to the sky in the summertime.”

Access accessories
The interior designer Karen Howes, founder of the luxury interior design company Taylor Howes, favours the “designer shoes and handbags” approach. “This is when you couple particular pieces with an M&S T-shirt, meaning that you spend your budget wisely, accessorising in the right places,” she explains. For instance, quality flooring throughout creates an impression of being seamless. A large, signature piece of art can cut back on acres of expensive wallpaper, or obviate the need for a crushingly expensive “statement” light fitting in a room.

Be bold
While state-of-the-art gyms and infinity swimming pools may remain the preserve of those with limitless budgets, be bold, Ashmore says. “Even in a more modest project, rather than adding excessive bedrooms, think about incorporating areas that you will enjoy and use, such as a yoga studio, an artist’s retreat or en suite bathrooms in the children’s bedrooms, which are incredibly practical, too.”

How to negotiate with estate agents

By Graham Norwood

Whether you are buying or selling, dealing with estate agents can be a trying experience — and, for sellers, an expensive one. Yet many agents are scrambling for business as the number of transactions falls: sales were 3.5% down last year, according to the latest figures from the Land Registry, and are predicted to drop again in 2018. So is now the time to negotiate down the fee?

Before you bullishly enter the fray, there are a few inconvenient truths worth noting. First, the lowest fee isn’t necessarily the top priority for sellers: fewer than 10% of homes are marketed via low-cost online agencies. Second, high-street agents have an incentive to charge a competitive commission rate — they earn their money by winning instructions and selling homes, so setting prices too high is counterproductive. Finally (and you may want to sit down for this), British estate agents offer good value, with an average commission rate of 1%-1.5%, compared with 4% in Canada, 3%-6% in Spain and 5% in the US.

Yet even a low percentage can lead to an eye-watering bill, simply because property prices in Britain are so high. The average home costs £220,962, according to the Halifax, despite a 3.1% drop in April. So, at 1%, the agent’s commission is more than £2,200, and at 1.5% it’s £3,314 — both excluding VAT, of course. If you’re selling a £1m home, which isn’t uncommon, it swells to as much as £15,000. A few high-end agents may ask fees of up to 2.5%, but these are rare.

How do I start negotiating? 
Get at least three agents to provide valuations and their marketing strategies for your home. Check the small print in their contracts: if the charges are blank, they’re up for negotiation. Ask them to state the commission, but don’t commit before you’ve compared figures and strategies from other agents.

“While we occasionally see 0.75% commission, it’s actually more like 1.2% at the moment,” says Paula Higgins, co-founder of the consumer group Homeowners’ Alliance. Be sensible when trying to strike a bargain — remember, an agent needs motivation to sell, so an unrealistically low commission may mean your property won’t be their top priority.

What is included in the fee? 
If you want real value for money, not just the lowest fee, check all aspects of an agent’s service, as well as their track record selling your type of property in your area. Most include preparing details and photos, placing them on portals such as Rightmove and Zoopla, and providing “For sale” boards within their standard fee.

What else should I watch for? 
Find out if you will be charged extra for a premium listing on Rightmove (one that pushes your property towards the top of buyers’ searches). And ask whether your fee includes the cost of an open-house event and advertising in the local press — or, if you are flogging an estate, Country Life magazine.

Will I be free to switch agent if I’m unhappy? 
Most sole agents have “lock-in” periods lasting 4-12 weeks — consumer groups say it’s unwise to accept longer terms, as it means you cannot easily switch agent if you’re unhappy.

Would it help to use an agent’s recommended services? 
Agents typically get referral fees after telling clients about their partner mortgage or conveyancing firms, but compare rates and reviews before making a decision, and remember that you’re under no obligation to sign up. Declining to use these companies must not — by law — be an excuse for the agent to disadvantage your property sale or the purchase of your next home.

What if I instruct more than one agent? 
“Rather than pay a multiple fee of 3% shared between them, no matter who finds the buyer, we adopt a winner-takes-all approach,” says Camilla Dell, managing partner of Black Brick buying agency and an arch negotiator with selling agents. She suggests saying up front that you’ll pay 2% or 2.5% to the agent who comes up trumps with a purchaser — and nothing to the ones who fail.

I’d like to incentivise my agent — am I allowed to? 
You certainly are. So, if the agent would usually charge, say, 1.25% commission to sell your home with an asking price of £500,000, why not strike a deal saying you’ll pay 1% if they get a sale for less than £475,000, but 1.5% if they find a purchaser who’ll offer £525,000 or more? You can have these terms written into your contract.

How about using an online agency? 
The savings can be large, but so can the losses. Most online firms charge about £1,000 if you pay upfront; in many cases, however, that’s lost if the agency fails to shift your home. Analysis by the investment consultancy Jefferies suggests some online agencies sell only 50% of the properties they list, and the unsuccessful vendors usually have to employ a traditional estate agent who charges commission — so they end up paying twice to achieve a sale.